Maintain short positions. The E-mini Dow formed a positive candle last night. It gained 49 pts to close at 24,869 pts, after oscillating between a high of 24,938 pts and low of 24,610 pts. Still, we think the downside move is not diminished yet, as the index continues to hover below the declining 21-day SMA line. Yesterday’s positive candle was the result of bargain-hunting activities after the recent plunge, in our view. Technically, the bearish sentiment remains intact as long as the E-mini Dow does not close above the 25,215-pt resistance mentioned previously. Overall, the market trend remains bearish.

As seen in the chart, the immediate resistance is seen at 25,215 pts, ie near the lows of 13-14 May. The next resistance is anticipated at the 26,000-pt round figure, set near the high of 9 May as well. Towards the downside, the near-term support level is anticipated at 24,284 pts, defined from the low of 28 Jan. This is followed by the 24,000-pt psychological mark.

Hence, we advise traders to maintain short positions, since we initially recommended initiating short below the 26,000-pt level on 10 May. A trailing-stop can be set above the 25,215-pt threshold in order to lock in part of the profits.

Source: RHB Securities Research - 4 Jun 2019